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ON Semi to Redeem Senior Notes

ON Semiconductor (ONNN) recently announced that it would redeem its Convertible Senior Notes due 2026 with a coupon rate of 2.625%. The company has notified the holders that the redemption would be done on Dec 20, 2013.

The redemption price would include 100% of the aggregate principal amount of the Notes along with the accrued and unpaid interest prior to the redemption date. Additionally, the holders of these notes have the right to convert those into shares of common stock until the close of business on Dec 19.

ON Semi has a well-diversified business and an end-market focus that would typically generate relatively steady revenues throughout the year. The company also acquired additional capacity through the SANYO acquisition that should come in handy once demand picks up. Though the overall business environment continues to improve and the end-market demand trends indicate strength in industrial and automotive markets, computing and consumer markets remain weak.

Last month, the company reported third-quarter 2013 earnings of 17 cents exceeding the Zacks Consensus Estimate by a penny. Revenues of $715.4 million were up 3.9% sequentially and at the mid-point of the company’s expected range of $700.0 million–$730.0 million.

At quarter-end, the company had cash and short-term investments balance of $553.6 million. The company had $249.0 million in short-term debt and $659.4 million in long-term debt on its balance sheet. Currently, the company’s debt-to-total capitalization ratio is only 38.2%.

ON Semi has a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Priceline.com (PCLN), Supertex (SUPX) and Inphi Corp. (IPHI). All these stocks carry a Zacks Rank #2 (Buy).